Breach of Contract In Residential Real Estate Transactions

Real Estate transactions are unavoidable since nearly everyone, at some point in their lives, will buy, sell or rent property. Real Estate transactions can be complex and oftentimes very confusing, which is why it’s important to have a real estate attorney with knowledge of local, state, and federal real estate laws in your corner when you enter into a real estate transaction and set down the terms into a real estate contract by which you will be bound to avoid a breach of contract.

Negotiating and drafting a residential real estate contract is a topic of its own. However, even with a well-drafted residential real estate contract, it is impossible to control the other party’s behavior. From time to time that party may fail or refuse to perform in accordance with the terms of the agreement; this is what is known as a breach of contract.

For example, when a Buyer signs a residential real estate contract, upon signing the agreement, he or she not only tenders the contract to the Seller’s attorney, but he or she also tenders the contract deposit. Once the contract is fully executed, the Seller’s attorney, as Escrow Agent, places the contract deposit into a segregated bank account known as an Escrow Account, where the money will remain until the Closing or the happening of an event (most often a breach of contract). If the Closing occurs, Seller is entitled to the contract deposit, and that amount is credited to the Buyer against the purchase price. If the Closing does not occur, either party may make a written demand for the contract deposit, depending on who was responsible for the breach of contract. If the Escrow Agent does not receive a timely objection to the demand for the contract deposit, he or she is authorized to release the contract deposit. If a timely objection is made, however, the Escrow Agent can continue to hold the contract deposit, or he or she can deposit the contract deposit with the Clerk of the Court in the county where the property is located until otherwise directed by either an agreement from all parties to the real estate contract or after a final, non-appealable judgment is rendered. Nevertheless, if the parties cannot agree who is entitled to the contract deposit, the parties must litigate the issue in court or, if there is an alternative dispute resolution provision in the agreement, in a mediation or arbitration. This is why it is important to not only have an experienced real estate attorney, but also an experienced litigator.

At Scaffidi & Associates we have experienced and skilled attorneys who can handle instances such as these with competency and efficiency. We are experienced residential real estate attorneys and experienced litigators who are eager to take the sting out of even the most difficult breach of contract situations and lead you to a positive outcome.

Types of Breach of Contract

There are many ways in which a residential contract can be breached, here are a few:

  • As the Buyer
    • Failure to have adequate funds for the contract deposit (e.g. check bounces)
    • Failure to tender the balance of the purchase price
    • Wilfully defaulting under the contract (e.g. purposely withholding documents from the bank so as not to receive a Mortgage Commitment Letter)
    • Failure to provide truthful and accurate Representations and Warranties
    • Failure to participate in good faith with pre-closing contingencies (e.g. for a cooperative, failure to attend a board interview)
  • As the Seller
    • Failure to deliver the proper deed
    • Failure to timely deliver the property
    • Failure to remedy agreed upon problems with the property
    • Failure to cure title defects
    • Failure to provide truthful and accurate Representations and Warranties
    • Failure to adhere to the Declaration or Bylaws when selling the property

What Happens When a Contract Is Breached

We understand that there often is a great deal of money at stake for the participating parties. If either party breaches the agreement and refuses to adhere to the terms of the contract, he or she faces legal and financial consequences.

When a Buyer breaches the Contract, the Seller’s sole remedy is to retain the contract deposit as liquidated damages since it is difficult to ascertain what would constitute a fair and reasonable amount of damages under the circumstances. On the other hand, when a Seller breaches the Contract, the Buyer is entitled to remedies set forth in both law (e.g. money damages – contract deposit plus reasonable expenses) and equity (e.g. specific performance – force the sale of the property or rescission of the contract).

In addition to any other remedies you may be entitled to, if you are a Seller, our capable attorneys will fight to ensure that you are entitled to the contract deposit in the event the Buyer breaches the Contract. Conversely, if you are the Buyer, we will work hard to ensure that you get your contract deposit back, and we will pursue all other available remedies if the Seller breaches the Contract.

Remember, however, that whichever side of a breach of contract you’re on when you come to Scaffidi & Associates, we are on your side.

At Scaffidi & Associates, our legal team has valuable experience dealing with clients who are involved in breach of contract disputes. If you find yourself in such a disturbing situation, we will be adept and assertive in representing you in Court, or at a mediation or arbitration, if necessary. Please contact us promptly so you have the best chance of a successful outcome. Give us a call or fill out one of the contact forms on our website.


We encourage you to take the time to explore this website as the information provided here will answer many of your questions. We believe that an educated client is our best client. We are also readily available to discuss your case in confidence, whether it’s a matter involving personal injury, medical malpractice, real estate, or other legal challenges. Regardless of the issue you are facing, we are uniquely qualified to provide you with exceptional legal representation and personal service. Call our office or complete the contact form on our website to set up a consultation.